Questcor Pharmaceuticals Inc.
) recently announced that it has completed the acquisition
of BioVectera Inc. for an immediate cash payment of CAD 50
million ($50.40 million approximately). Stakeholders of BioVectra
could also receive up to an additional CAD $50 million on the
basis of its financial results in the next three years.
Questcor and BioVectra have had a long association with the
latter manufacturing the active product ingredient (API) for
Questcor's H.P. Acthar Gel. With this acquisition, Questcor will
gain access to Acthar's manufacturing trade secrets for Acthar.
The acquisition would enable the company to meet the continuing
demand for Acthar, strengthen its technical and scientific
expertise, and allow international expansion.
We are positive on the acquisition of BioVectra, which is
expected to be immediately accretive to earnings. The deal
provides vertical integration and will help strengthen the Acthar
manufacturing process. BioVectra's sales in the fiscal year ended
Aug 31, 2012, were $28 million, up 15%.
Acthar, an injectable drug, is the lead product at Questcor. It
is approved by the FDA for as many as 19 indications. The
company's other product is Doral (insomnia). 5,590 vials of
Acthar were shipped during the third quarter of 2012, up 92% year
We currently have a Neutral recommendation on Questcor, which
carries a Zacks Rank #3 (Hold). We expect investor focus to
remain on reimbursement issues related to Acthar as well as the
investigation being conducted by the United States Attorney's
Office for the Eastern District of Pennsylvania (USAO) regarding
the company's promotional practices.
Pharma companies that currently seem to be in a better
position include Valeant
Pharmaceuticals International Inc.
), which carries a Zacks Rank #1 (Strong Buy). Other
companies performing well are
BioCryst Pharmaceuticals, Inc.
Anacor Pharmaceuticals, Inc.
), which carry a Zacks Rank #2 (Buy).
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